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German retail sales surprise to upside in February

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(Globalpost/GlobalPost)

Retail sales in Germany surprised to the upside last month, rising modestly after already clocking up strong gains the previous month, official data showed on Thursday.

Retail sales rose by 0.4 percent in February compared with January in price, seasonally and calendar-adjusted terms, according to provisional figures by the federal statistics office Destatis.

Analysts surveyed by Dow Jones Newswires had expected a drop of around 0.6 percent this month following a rise of 3.0 percent in January.

On a 12-month basis, however, retail sales were down by 2.2 percent in February, but that was partly because there was one fewer shopping day this in February this year than in the same month last year, the statisticians noted.

Monthly retail sales data are volatile and subject to frequent revision.

Taking January and February combined to iron out some of the volatility, German retail sales inched 0.2 percent higher, Destatis calculated.

Analysts viewed the renewed increase in retail sales, albeit modest, as good news for the German economy, where confidence appears to have stalled recently amid fears of a resurgence of the eurozone debt crisis.

Consumer sentiment risks being soured by the political gridlock in Italy and the Cyprus crisis, market research company GfK found on Thursday.

The data represented "good news from the German consumer," said Berenberg Bank economist Christian Schulz.

"Germany's economy had a strong start to 2013. The fading of financial market tensions has gradually boosted confidence, adding momentum to strong underlying fundamentals such as low unemployment and rising wages," he said.

"Unfortunately, the latest sentiment indicators have revealed the impact of the Italian post-election stalemate. Soon the chaotic Cypriot bail-out is likely to drag on confidence, too. The good start may give way to yet another period of uncertainty," Schulz warned.

Natixis economist Johannes Gareis was more confident.

"Overall, the slight rise of retail sales in February underlines our scenario of a stronger growth of private consumption in the first quarter of 2013," he said.

"Nonetheless, as retail sales are notoriously volatile and prone to frequent revisions, time will tell. Overall, we expect the German economy to return to growth in the first quarter after the dismal fourth quarter last year," Gareis said.

Annalisa Piazza at Newedge Strategy also saw the retail sales data as "good news for the German economy.

"Indeed, household consumption is expected to be supportive for gross domestic product growth in the first quarter after the sharp decline in activity in the fourth quarter of 2012," she said.

"All in all, the report was encouraging, suggesting that -- despite the recent turmoil -- Germany still remains the 'engine' of growth for the eurozone," she concluded.

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http://www.globalpost.com/dispatch/news/afp/130328/german-retail-sales-surprise-upside-february